It's Still The Economy, Stupid

itstheeconomy.blogspot.com...

He says it like it is:

"The United States has become the consumer of last resort. We consume the world's production and exchange it for promises to pay it back in the future. Looking at GDP (our income statement) and the Z-1 (our balance sheet) shows that this fundemental disequilibrium is only growing worse over time. It cannot go on forever and it will end in tears. In the meantime we just have to expect more chaos in relative prices, while "inflation" remains tame. Another year of 10% health care premium increases and 2% cost of living adjustments for seniors. Another year of earning 2% on your CDs while paying 6% on your mortgages. Another year of tuition hikes and empty recruitment fairs. Another year of dipping into home equity to pay for it all. Could we see a $600 billion budget deficit for 2004? How many states will go bankrupt? A $1 trillion trade deficit? How extreme can it get before the whole infrastructure breaks apart? We do live in interesting times."

Sounds like the Crash of 2005 is nearing. I have decided, once my business takes off, I will move to Canada ASAP. It may not be pretty, but the US is standing on a one Jenja block...

Funny but today I read in business news the markets are up again and getting firm.

Housing is on fire and consumer confidence is hardening.

The economy is on the upswing.

This is good because low interest rates is what everyone wants.

The only damper is a lack of employment growth but I predict that will also increase due to primary drivers.

Here in Canada things are a bit better for the time being but our unemployment rate is historically two to three points above that of the USA.

My only concern is large debt levels of people and governments and less so corportations.

In the long run the debt issue is the most worrisome.

Americans buy too many video games and what-not while others are starving.

This is exactly what happened to the Roman Empire. The citizenry imported too many pleasurable items from other countries and their was a constant outflux of gold from their treasuries. Then the entire economy weakened to the point of weakening their defenses.

[Edited on 30-10-2003 by TheManWithThePlan]

ManWith,

this is true of every leading empire is it not?

look at Spain or England or France or Athens or Egypt or any other power of the past.

all that changes is the type of toys.'

what is good about it is the increase in technology but yes there is unfairness also.

I do think there is more wealth transfer in modern business model than in the past with colonies though.

"I do think there is more wealth transfer in modern business model than in the past with colonies though."

Investment is much more prominant today then it was back then so even though the wealth barrier in America is increasing - as was the case of the latter economy of Rome - Collection of money by individuals is being reinvested and circulated throughout which brings stability that Rome did not have.

Two main factors historians contribute to the fall of Rome are (1)lack of inner-circultion of capital and (2) trade deficit with other countries, but mainly the Eastern Empire.

All though the first factor is not as big of a problem today in any country, the second can still weaken the economy. Currently, more goods are being imported then are being exported by a total of $435.2 billion. As the economy sags because of it, so does the infrastructure and resources causing production and export to decrease while rich people still import.

ManWith,

valid points.

a trade defficiet will get you in the end.

I assume that the retructuring of economies around the world will not be just overseas but result in first world economies becoming much more service oriented.

Problem is the slow pace of this transformation.